Economic Condition of Idaho Agriculture 2017 House Agricultural

Economic Condition of Idaho Agriculture – 2017 House Agricultural Affairs Committee Ben Eborn, Rita Du, and Garth Taylor February 14, 2018

2017 2 nd quarter. . . heartland has ag heartburn

2017 3 nd quarter. . . ag heartburn

Ag’s importance to Idaho • Idaho economy • Western states • Idaho businesses

Idaho 4 th largest Ag state economy Farm GDP as % of Total GDP, 2015 8. 0% 7. 0% 6. 0% 5. 0% 4. 0% 3. 0% 2. 0% 1. 0% So ta pi M in ne so ip iss M Ar ka ns as as ns ta on M Ka na o ah Id a w Io as br Ne ut h Da ko ta ka 0. 0%

Idaho ranks 3 rd in West net farm income Net Farm Income ($billions) 16 14 $ Billions 12 10 8 6 4 2 0 CA WA ID CO OR AZ MT NM UT WY NV Source: USDA

Multiplier effects…Ag. Biz Idaho’s largest industry Idaho base output by sector of the Idaho economy, 2013 Livestock Crop farming 4% 4% Ag processing Households 13% 18% Forest Government products and misc. 3% 10% Trans, construction, and utilities Other mfg 11% 7% Trade Hi-tech mfg Services 4% 13% 11% Ag. Biz multiplier effects Ø 20% of output Ø 14% of jobs Ø 16% of GDP Mining products 3% Source: Taylor, Watson, & Eborn - University of Idaho

Farm-gate cash receipts • Idaho 2017 cash receipts • Idaho versus US cash recipient growth • Why are cash receipts growing? • Government payments

Following two down years, 2017 cash receipts up 5% Idaho Cash Receipts, 2017 Other Crops 7% Wheat 6% Sugarbeets 4% Cattle and Calves 23% $7. 5 billion up 5% Potatoes 13% Hay 5% Beans 1% Barley 4% Other Livestock 3% Milk 34% $7. 1 billion, 2016 Source: University of Idaho

2017 cash receipt ups and downs Crops $2. 9 billon, ↑ 3% Livestock $4. 6 billion, ↑ 7% Potatoes: ↑ 15% Cattle & Calves: ↑ 5% Milk: ↑ 7% Barley: ↓ 1% Dry Beans: ↑ 33% Wheat: ↓ 2% Sugarbeets: ↓ 7% Hay: ↑ 1% Source: University of Idaho

Idaho real cash receipts outgrow U. S. by 40% Real Idaho Dairy vs Real Idaho vs Real US Cash Receipts (2017$) (1997=100) 400 362 (2014) 300 276 24% 190, 2014 200 158, 17% 100 146, 2014 f 18 20 17 20 20 16 100 15 20 14 20 13 20 12 20 11 Idaho, dairy 20 10 20 09 20 08 20 07 20 06 20 05 20 20 04 Idaho all commodities 03 20 02 20 01 20 00 20 19 98 19 19 97 0 99 US all commodities 121, 24% Source: USDA-ERS, 2016 University of Idaho

Growth comes from production not price Dairy 1. 5 % Growth 1 134% 65% 126% 48% 0. 6 0. 2 5% 2% 0 0 -1 GROWTH IN REAL VALUE OF POTATO (1980 TO 2016) 0. 4 0. 5 -0. 5 Potatoes GROWTH IN REAL VALUE OF MILK (1980 TO 2016) Total Milk Price (real) Milk per Sales (real) cow -59% Cow Inventory -0. 2 -0. 4 -0. 6 Total Price (real) Potatoes Potato per Acre Sales (real) Potato Acres -45% Source: University of Idaho

Support programs pick up with lower grain prices 180, 000 160, 000 Idaho Government Payments, 2008 -2017 Direct payments Conservation 140, 000 $1, 000 120, 000 MILC, Disaster & Other programs ARC, PLC & MPP 100, 000 80, 000 60, 000 40, 000 20, 000 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 F Source: USDA-ERS 2008 to 2015, University of Idaho & FSA 2016 to 2017

Idaho Ag exports rebound after 20% decline 2. 5 $ Billions 2. 0 Idaho Ag Exports, 2000 to 2017 Plant products Animal products 1. 5 1. 0 0. 5 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 f 0. 0 Source: 2000 to 2016 USDA-ERS; 2017 Laura Johnson Idaho Dept. of Ag, Global Trade Atlas

Idaho Ag exports: Dairy, Potatoes, and NAFTA Idaho Ag Exports by Country, 2016 Canada 25% ROW 34% Japan 5% China 6% [CATEGORY NAME] [PERCENTAGE] Source: US Census Bureau Mexico 24% Source: USDA-ERS

Net Farm Income • Idaho 2017 net farm income • Idaho versus U. S. net farm income

After 3 down years, net farm income up 15% Idaho Net Farm Income (%change from 2016) 15% 5% TOTAL REVENUES $1. 9 billion Up 15% 2% TOTAL EXPENSES NET FARM INCOME $1. 7 billion, 2016

Idaho real net farm income has grown 100% more than U. S. Real Idaho vs Real US Net Farm Income (2017) (1997 =100) 247 (2011) 300 250 200 217 (2013) 150 185, 25% 100 79, 55% 50 Idaho Net farm income Index 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 f 20 01 20 00 20 19 98 19 97 19 99 US Net farm income 0

Without price floor volatile milk prices $2. 50 U. S. Farm-level milk prices, 1961 -2014 $1. 50 $1. 00 $0. 50 $0. 00 1961 1964 1967 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 $/gallon $2. 00 Source: Bozic U. of MN

GDP & jobs • Idaho farm GDP versus Idaho total GDP • Idaho farm and food manufacturing jobs

Real Idaho farm GDP has grown 90% more than real Idaho total GDP Real Idaho GDP vs Farm GDP vs Food Mfg GDP (1997=100) 300 259 250 200 172 150 120 100 50 Idaho Total GDP Farm GDP Food Manuf Index Ø Idaho real GDP(2009$) Ø $61 billion in 2016 Ø Farm GDP (2009$) Ø 4. 5% of Idaho GDP Ø Food mfg GDP (2009$) Ø 2. 6% of Idaho GDP 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 1 20 5 16 f 98 19 19 19 97 0 Source: US Dept. of Commerce, BEA

5 Ag recessions since 2007 (quarter to quarter Idaho GDP % change) All Industries and Ag & Forestry 2007 -2016 13 8 3 -2 -7 -12 Total GDP -16% -17 Ag & Forest GDP 2016 Q 1 2015 Q 3 2015 Q 1 2014 Q 3 2014 Q 1 2013 Q 3 2013 Q 1 2012 Q 3 2012 Q 1 2011 Q 3 2011 Q 1 2010 Q 3 2010 Q 1 2009 Q 3 2009 Q 1 2008 Q 3 2008 Q 1 2007 Q 3 2007 Q 1

Idaho farm proprietors income volatility Source: HIS Economics Year Farm Proprietors Income ($billion) % change 2011 2012 2013 2014 2015 2016 2017 2018 2019 1. 30 1. 51 1. 59 1. 65 1. 72 1. 55 1. 37 1. 29 1. 36 89% 17% 5% 4% 4% -10% -12% -6% 6%

Idaho Jobs 1997 -2016 50 950 40 900 850 30 800 20 750 700 10 Ø Total Idaho Ø 977, 000 jobs Ø Up 28, 000 Ø Farm Ø 39, 000 jobs 2016 Ø Up 100 Ø Food mfg Ø 18, 000 jobs 2016 Ø Up 650 14 0 20 20 20 12 Food manuf 10 Farm 08 06 20 04 20 20 00 20 98 02 Idaho Total jobs 600 20 650 19 1, 000 Jobs, All Industry Total 1, 000 Jobs, Farming & Food Manufacturing Farming & food manufacturing = steady jobs Source: US Dept. of Commerce, BEA

Farm Financial Conditions • U. S. farm balance sheets • Idaho farm land values

Record high real estate debt offset by clean balance sheets

DELINQUENCY RATES INCREASED SLIGHTLY, BUT REMAIN LOW. Delinquency Rates at Commercial Banks 12 Percent, seasonally adjusted Non-Real Estate Farm Loans* 10 Farm Real Estate Loans* All Bank Loans** 8 12 10 8 6 6 4 4 2 2 0 0 2006 2008 2010 2012 * Includes the share of all past due, non-accruing and net charge-off loans. ** All bank loans include all loans made at commercial banks. Sources: Federal Reserve Bank of Kansas City’s Agricultural Finance Databook, and Board of Governors. 2014 2016

NW cropland over $6, 000 but few sales Source: Northwest Farm Credit Services

• • 2018 revenue themes – Export markets rebound • Weaker dollar • Strengthen foreign economies • Russian embargo – Ethanol demand increasing – Huge grain production – Record grain stocks 2018 costs themes – Oil below $60 a barrel – Low, but rising, interest rates 2018 Outlook crop Comments Milk Contracts NOT renewed and herd liquidation. Milk prices NOT good until 2 nd half of 2018. Wheat Huge stocks and record world production. Lowest wheat acres in 100 years. Hay Huge stocks. Weak corn price. Beef Prices continue good – not great like 2014 and 2015 Spuds First part of 2018 will be very good prices for 2017 crop BUT with 2018 crop prices will fall because farmers over plant because of grain and hay prices are weak Sugarbeets Revenues largely dependent on yields Corn Huge stocks and record yields Barley Priced from wheat

QUESTIONS?

IDAHO MILK PRODUCTION AND PRICES, 2012 -2017 Milk Production Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average Total Change 2012 2013 2014 1116 1106 1135 1046 1004 1032 1127 1131 1157 1108 1117 1141 1172 1178 1200 1154 1156 1192 1187 1174 1225 1183 1180 1213 1117 1099 1144 1137 1110 1164 1092 1069 1115 1119 1107 1155 1, 130 1, 119 1, 156 13, 558 13, 431 13, 873 -1% 3% 2015 1154 1052 1186 1173 1234 1195 1228 1225 1171 1195 1136 1165 1, 176 14, 114 2% Milk Prices 2016 1179 1125 1226 1197 1258 1241 1297 1291 1225 1237 1180 1209 1, 222 14, 665 4% 2017 1197 1073 1207 1192 1278 1256 1298 1299 1221 1239 1175 1215 1, 221 14, 650 0% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average Change 2012 17. 70 16. 90 16. 70 16. 40 15. 80 15. 90 16. 70 17. 60 19. 40 21. 30 21. 20 19. 60 $17. 93 2013 19. 20 18. 50 18. 20 18. 80 19. 10 18. 80 18. 10 18. 60 19. 10 20. 70 21. 00 $19. 18 7% 2014 22. 60 23. 90 24. 30 24. 50 23. 00 22. 50 22. 40 23. 20 25. 10 24. 20 22. 40 19. 40 $23. 13 21% 2015 2016 2017 16. 80 15. 60 18. 30 16. 40 15. 40 18. 40 16. 30 15. 00 16. 60 16. 50 14. 70 16. 10 16. 60 14. 20 16. 90 16. 70 14. 60 16. 70 16. 30 16. 20 16. 50 17. 30 17. 20 16. 90 17. 20 17. 30 17. 10 16. 40 18. 10 17. 6 17. 90 17. 50 16. 70 18. 60 17. 50 $16. 70 $16. 09 $17. 26 -28% -4% 7%

2017 COW HERD INCREASED 13, 000